US-China Market Watch: Bitcoin Ban, Tencent Pictures Slate

By Angela Bao

China declares digital coin trading “illegal”

Chinese regulators have placed a comprehensive ban on all digital currency trading, partly because the government saw digital currencies as a threat to the stability of the financial market. Digital currencies are popular amongst startups because it allows them to raise massive amounts of money (some have raised over $1 billion), relatively quickly.

China’s central bank immediately asked all digital currency-related fundraising to be halted immediately. The bank also said that any future offerings will be severely punished, and that all transactions that have presently been completed must provide refunds. China is also going to shut down all existing domestic bitcoin exchanges, and even block access to foreign exchanges.

In the immediate wake of the news, prices for bitcoin fell drastically, but has since bounced back somewhat, although it’s nowhere near its record high in early September when it topped $5,000. However, Reuters reports that the crackdown hasn’t dissuaded bitcoin traders, but simply caused them to move to peer-to-peer marketplaces. The crackdown has also created an “arbitrage opportunity” in China, since prices there are much lower compared to those overseas. It still remains to be seen what the long-term effects of China’s ban will be.

Tencent Pictures unveils ambitious slate for 2018

Tencent has announced that its content-making arm has 43 titles slated for production, distribution, and investment in 2018, ranging from feature films to online television shows. The two-year-old Tencent Pictures ratcheted up its slate from the previous year in a clear bid to achieve its aims of becoming a multimedia content powerhouse and compete more with both Alibaba Pictures Group and Wanda Media.

Some of the films include co-productions like “Zombie Brother,” which will collaborate with actor Channing Tatum’s production company, Free Association, as well as renowned Chinese director Lu Chuan’s upcoming movie, “20,000 Miles.” American director, screenwriter and producer David Goyer, best known for his work on The Dark Knight trilogy, will also be developing projects for Tencent Pictures, which Variety says will be geared either towards Chinese or global audiences.

China announces crackdown on patent, trade secret violations

In efforts to mollify foreign companies prior to Trump’s anticipated visit to Beijing, the Chinese government has announced a crackdown on violations of trade secrets and patents in part of China’s efforts to address concerns over intellectual property (IP) protection.

China’s Ministry of Commerce said the four-month campaign would increase penalties on the theft of foreign trade secrets and patent violations in an effort to encourage foreign investment in China. However, the American Chamber of Commerce in China says American companies are skeptical about the long-term effectiveness of this crackdown on much more serious IP issues. After two decades of double-digit increase, foreign investment into China fell by 0.2 percent from January to August 2017, compared to the same time last year.

Trump blocks Chinese acquisition of Lattice Semiconductor

Trump blocked China-backed private equity firm Canyon Bridge Capital Partners’ $1.3 billion acquisition of Portland, Ore.-based chip company Lattice Semiconductor Corp., citing national security concerns since the U.S. government also uses Lattice products. The decision comes after both Canyon Bridge and Lattice spent eight months trying to convince the Committee on Foreign Investment in the United States (CFIUS), which evaluates foreign deals for potential security threats, to approve the acquisition.

This calls into question several other proposed Chinese acquisitions that are currently under review. Alibaba’s Ant Financial has resubmitted its takeover deal of U.S. money transfer company, MoneyGram, for $1.2 billion for the third time. However, the sale of Anthony Scaramucci’s hedge fund SkyBridge Capital to Chinese conglomerate HNA is on track to close in late September, according to SkyBridge’s chief investment officer, although they are also awaiting approval from the Committee on Foreign Investment in the United States.

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